In Washington, D.C., it’s a Democratic party mantra: Any stimulus bill that doesn’t include a couple hundred billion dollars in state and local aid is a failure.
Elsewhere in the country, however, the new bipartisan stimulus package that Congress may pass within days looks pretty generous. “You don’t look a gift horse in the mouth,” Jared Polis, the Democratic governor of Colorado, told Yahoo Finance in a Dec. 16 interview. “This is a good package. Frankly, I’m glad to see Republicans and Democrats get together on anything.”
The new plan includes about $900 billion in fresh aid, without the two poison-pill measures that have sunk negotiations for nearly six months. First, there’s no direct aid for states and cities whose tax revenue has plunged as businesses have shut down and consumers have stayed home. Democrats insist such aid is crucial, but Republicans, rightly or wrongly, view direct state and local aid as a blue-state bailout they simply can’t countenance.
Also missing is a provision that would grant businesses broad liability from legal action if employees or customers contract the Covid-19 virus on their premises. Republicans say gasping businesses need this sort of protection to reopen and survive, but Democrats say it would lead to reckless corporate behavior and let businesses endanger workers without consequence.
With those measures spiked, both parties are approaching agreement on what would still be a meaty amount of stimulus. The evolving plan would include around $600 in checks to all adult Americans below a certain income threshold, probably $75,000 per year. There would be supplemental unemployment insurance of $300 per week for several months and another $300 billion in aid for businesses hard-hit from the coronavirus recession. Also likely to be included: About $90 billion to help states and cities with emergencies, $80 billion for schools and $50 billion for health care assistance, including distribution of the coronavirus vaccine and additional testing.
That’s not direct aid to states and cities—but it still helps. “There is indirect aid to help state priorities,” Polis says. “There's help for school districts, as an example. That goes right out to the schools that are largely funded by states. There is a fierce urgency about getting something done here as, quite literally, states run out of funding for vaccine distribution and testing to critical health responses in the next couple of weeks.”
Governors want as much help as they can get from Washington, especially since Washington can borrow money and run deficits in ways states and cities can’t. New York Gov. Andrew Cuomo said it’s a “major disgrace” Congress withdrew direct aid from the latest bill. Federal Reserve Chair Jay Powell and many economists would like Congress to appropriate whatever it takes—say, $2 trillion or more, rather than $900 billion—to power the economy out of a hole that might get deeper before a Covid vaccine is widely available in 6 or 9 or 12 months. Money spent now can be recouped through a faster recovery and higher tax revenue, compared with a tepid recovery that leaves many workers unemployed for months or years.
The key question is whether Congress will pass even more stimulus in 2021. Congress has already spent about $2.5 trillion, which would rise to around $3.4 trillion if the new bill passes. Polis, like others, says “they can always do more later,” and incoming President Joe Biden has called for trillions in additional spending as part of his “Build Back Better” economic plan.
But some Democrats worry this will be the last stimulus bill, and the question probably hangs on the outcome of runoff elections for the two Georgia Senate seats on Jan. 5. If Democrats win both, they’ll have a one-vote majority in Congress, and control of the agenda. But Republicans need to win just one of the two neck-and-neck races to keep control of Congress, and Majority Leader Mitch McConnell has hinted he won’t support more stimulus beyond whatever the current bill turns out to be. He could change his mind, of course, but there’s not necessarily more where that came from.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Click here to get Rick’s stories by email.
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